Tag Archives: ftth

FTTH expansion proposed for Riverside County desert communities

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Anza Electric Cooperative wants to expand its fiber-to-the-home system in southwestern Riverside County. After being awarded a $2.7 million FTTH infrastructure grant from the California Advanced Services Fund in 2015, Anza used its existing electric plant as the backbone for a fiber network aimed at reaching 3,800 homes in its service territory.

Now, it’s asking the California Public Utilities Commission for another $2.2 million, to reach 1,200 more homes and "several businesses", and provide free service to fire stations and the Ronald McDonald camp for kids with cancer According to the public version of its grant application summary

Connect Anza will deploy a fiber optic cable on existing poles and rights of way and establish a network of sufficient capacity to establish high speed, quality internet service for Anza Electric Cooperatives (AEC’s) existing service territory covering over 500 square miles, located wholly within western Riverside County. The area encompasses the communities of Mountain Center, Pinyon Pines, and Garner Valley which totals approximately 200 square miles of our service territory…

Connect Anza, as an integral part of AEC, will provide reliable, affordable broadband high speed, Fiber-ToThe-Home (FTTH) internet service to its member-owners at the lowest possible cost. Connect Anza will offer speeds of 50Mb/s both down and up to residents at a price point of $49.00 per month with no cap or limits. AEC will also offer VoIP service including CASF e911 requirements at a monthly rate of $20.

There’s one big difference between this project and Anza’s previous one: the first time around, it was going head to head with Verizon, which paid virtually no attention to its own wireline telephone systems, let alone potential competitors.

Since then, Frontier Communications has taken over those systems, including the ones that don’t offer even 1990’s legacy DSL in most of Anza Electric’s territory. The relatively few areas where broadband service is offered, speeds don’t reach the CPUC’s minimum of 6 Mbps download and 1.5 Mbps upload speeds. In contrast to Verizon, Frontier aggressively, and increasingly beligerently, challenges CASF grant proposals that pose a competitive threat to its monopoly control of, at best, poorly served areas of rural California. It won’t be so pleasant this time around.

California FTTH grant approved under current subsidy program rules

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California’s primary broadband subsidy program will stay on its present course, at least until the legislature changes it or the California Public Utilities Commission resets priorities and rules going forward. That’s the takeaway from a CPUC vote to approve a $1.1 million grant from the California Advanced Services Fund (CASF) for a fiber to the home project in southern Santa Clara County.

It’s an important message to independent Internet service providers who might be considering CASF-funded projects in the future: it’s expensive to prepare and submit applications – more than $100,000 in some cases – and the prospect of having one rejected a year or two later because the rules changed increases the risk beyond the point most are willing to go.

By a 3-to-2 vote, the commission approved the Light Saber Project grant, which will pay about 60% of the cost of building out an FTTH system to 150 homes in the Paradise Valley community, in the hills east of Morgan Hill. It was the second time commissioners considered the grant. The first time, they kicked it back for more work.

This time around, the debate wasn’t really about the project itself. Rather, the debate centered on whether CASF grants should be put on hold until the commission sets new priorities for the program and/or the California legislature rewrites the rules completely.

Broadband subsidy priorities shouldn’t be set retroactively, commissioner Liane Randolph told her colleagues…

The applicant put together a project under our current system, proposed it to us and as we’ve discussed there are changes and kind of systemic modification we can make to the program, or we’re happy to take further legislative direction on how to prioritise projects, but I’m hesitant to not let a particular project move forward when they’ve presented it with the program we currently have in the effect and are administering it right now.

Commissioner Martha Guzman Aceves didn’t agree, saying that as it stands, the CASF program lacks focus…

The bigger driver for me is the lack of prioritisation of the program and that’s really the context. I think the legislation will inform that. Now, the bigger issue for me is that we do have a structure that I don’t currently agree with, but I appreciate that these are the rules that are in place today.

Randolph was joined by commissioners Carla Peterman and Clifford Rechtschaffen in voting to approve the project. Along with Guzman Aceves, commission president Michael Picker also voted no.

CPUC takes another look at a Santa Clara County FTTH subsidy

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A stalled Santa Clara County fiber to the home project might get back on track this week. A proposed $1.1 million grant for the Light Saber Project is scheduled to go in front of the California Public Utilities Commission next Thursday.

It’ll be the second time that commissioners have taken a look at it. LCB Communications/South Valley Internet, an independent Internet service provider in southern Santa Clara County, applied for a $2.8 million grant from the California Advanced Services Fund (CASF) in 2015 for a plan to build out fiber to more than 500 homes in the San Martin and Paradise Valley communities, south and east of Morgan Hill, respectively. A wireless ISP challenged the application, claiming it provided service at or above the CASF minimum of 6 Mbps download and 1.5 Mbps upload speeds. The result was that San Martin, where most of the homes and lower income households were located, was removed from the project.

That left 150 homes in Paradise Valley. The grant request was trimmed to $1.1 million and sent on to the commission for consideration in February. It ran into headwinds at the meeting: the idea of subsidising FTTH service to a relatively affluent community was not well received. The median household income in Paradise Valley is $102,000 per year, which is quite a bit higher than many other communities in California. On the other hand, it’s in Santa Clara County, where the California housing and community development department sets a low income threshold of $85,000 for a four-person household.

No vote was taken and Light Saber was sent back for more work. Some of the details were adjusted, the budget was trimmed a bit, and now it’s being resubmitted to commissioners. But as the new draft of the grant resolution points out, it "is substantially the same as the prior draft resolution". What might have changed, though, is how the project is viewed in the context of the CASF program rules and project grant standards. The CPUC is considering whether to change those rules, in a process that was initiated, in part, because of the push back on Light Saber as well as the Digital 299 project, which was likewise put on hold at the same meeting. When Digital 299 came back for a vote and was approved in March, there was an acknowledgement that it had been submitted with good faith reliance on the rules as written. That reasoning applies equally well to Light Saber.

Better data would support better muni broadband decisions

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Not suprisingly, the municipal fiber to the home analysis done by the University of Pennsylvania’s Center for Innovation, Technology and Competition, comes to the conclusion that the more successful systems (or, from the study’s glass half empty perspective, the ones that are failing less badly than the others) keep revenue high and costs low. Operating efficiency – the ratio of operating costs to revenue – and revenue per household had a greater impact on near term positive cash flow and long term capital payback than the per household construction costs…

The fact that these regressions yielded statistically significant results based on only 19 or 20 observations is remarkable. These results suggest that the manner in which a municipal fiber project is operated, both in terms or generating revenue and minimizing operating cost, play a more critical role in the success of a municipal fiber project than the upfront capital costs.

One note of caution: although expense versus income and per household construction costs are commonly used measures for evaluating subscription-based business models, such as FTTH, using revenue per total households passed conflates take rate/market share and average revenue per subscriber, two separate and individually important metrics.

The reason for this relatively vague approach is the general lack of transparency on the part of muni FTTH systems. Of the 88 systems identified by the authors, only 20 broke out FTTH results from overall utility financial statements – overwhelmingly, it’s muni electric utilities that are in the business of being Internet service providers. Publicly traded telecoms companies, by contrast, report results using standard benchmarks that allows the public to make apples to apples comparisons and make informed decisions about which ones to invest in. Taxpayers deserve to have the same level of data when they’re called upon to decide whether or not to build a muni FTTH systems in the first place, and subsidise it on an ongoing basis.

Muni FTTH study estimates the cost of local subsidies

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Municipal fiber to the home systems are not money makers, according to a study done by the University of Pennsylvania’s Center for Innovation, Technology and Competition. It started by identifying 88 muni systems in the U.S., and then dove into a top-line financial analysis of the 20 that publish separate separate operating statements – the rest consolidate their FTTH reporting with the results from their muni electric utilities.

According to the authors, less than half are showing positive cash flow and most of the rest aren’t making enough to pay back basic construction costs…

The data contained in this study are sobering. Municipal fiber is not an option for the 86 percent of the country that is not served by a municipal power utility. Of the 20 municipal fiber projects that reported the results of their municipal fiber operations separately, eleven generated negative cash flow. Unless operations improve substantially, these projects cannot continue to operate over the long haul, let alone cover the capital costs needed to establish operations. Of the others, five are projected to take more than 100 years to recover their costs, and two others are projected to take over 60 years. Only two are on track to break even, and one of those is based on a highly urban, business-oriented model that few other cities are likely to be able to replicate, and the other includes data from two years of stronger performance when it offered only DSL service.

The study does a reasonable job of looking at the available data, albeit from the limited perspective of five years of results. The real problem is the lack of detailed financial reporting by muni FTTH systems. Although operating efficiency is identified as an important factor in whether or not the systems with positive cash flow, there’s no easy way to gauge success on the traditional metrics for subscriber-based businesses, such as market share, churn rate, subscriber growth and average revenue per customer. Given the public sector’s typically long term view and investment time frames measured in decades, it would be helpful to be able to get some idea of what operating results might look like another five, ten or more years in the future. The CTIC study takes a snapshot based on five particular years – 2010 through 2014 – which is fine as far as it goes, but it really doesn’t go far enough.

State and federal subsidies were excluded from the analyses, except for a couple of side calculations. The operating losses, in some cases, and the lack of ability to fully repay initial capital costs are, in effect, the local subsidy. The fact that local taxpayers (or utility ratepayers, where the distinction is meaningful) have to support muni FTTH doesn’t necessarily mean those systems are failures. The answer to that questions depends on how long those subsidies will last and whether the local electorate considers them to be acceptable and appropriate, assuming that they were able to make an informed choice, directly or indirectly.

Gigabit fiber in San Bernardino County heads for CPUC vote

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A fiber to the premise project for San Bernardino County – largest yet – is scheduled to go in front of the California Public Utilities Commission in May. A draft resolution was published on Friday, which proposes to award $29 million to Race Telecommunications from the California Advanced Services Fund (CASF) to build an FTTP system in and around the San Bernardino County communities of Phelan, Piñon Hills, Oak Hills and Hesperia.

As designed, it would pass 8,400 homes, which is “the most households ever given access by a CASF-subsidized last-mile project”, according to the draft. Race is projecting a 68% take rate, which amounts to 5,700 subscribers. Another 85 potential business and institutional customers will also be reachable via the system. The subsidy comes out to $3,400 per premise, which is in line with past CASF-funded FTTP projects. In the past two years, the CPUC has approved $48 million for eleven FTTP proposals totalling 12,400 homes, a $3,900 average all up. On a project basis, the median subsidy $7,000.

As with its past CASF-subsidised projects – Race has received eight CASF grants and completed work on four – its plan calls for offering symmetrical gigabit service for $60 a month to residences. Businesses would pay $200 for 100 Mbps service. There’s no mention of data caps for either.

The Phelan project also marked another first for the CASF project. After Race submitted its initial application for a $48 million subsidy, Ultimate Internet Access – another ISP with a CASF track record – submitted a competing proposal, which would have cost less than half that. During the ensuing months of back and forth discussions, the project area was adjusted and costs were trimmed. Race came back initially with a $23 million subsidy request, but after further changes to project plans and service area the final tab ended up at $29 million.

Google says we’re so sorry Kansas City and yanks fiber

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Grab the Google rabbit by the tail and face the situation.

Google’s vague pledge to complete fiber networks it was already building is worthless, it turns out. According to a story by KHSB-TV, residents of some Kansas City neighborhoods who signed up for service but never received it are getting cancellation notices from Google…

Hello,

Thanks for signing up for Google Fiber. Although we’ve been working hard to bring you service, we’re unable to build our network to connect your home or business at this time.

Unfortunately, that means we’ll need to cancel your Fiber account. If you paid a deposit, we’ll refund your deposit amount to your original form of payment in the next two weeks.

If you signed up for our Fiber 1000 or Fiber 1000 + TV plan, your additional 1TB of Google Drive storage will be removed and your storage limits will be set back to the free levels. Everything you have in Google Drive, Google+ Photos and Gmail will still remain intact and be accessible, but you won’t be able to create or add anything new over the free storage limit.

We’re so sorry for any inconvenience we’ve caused you. And we’d like to keep you updated on our progress if we can bring you Fiber in the future. If you would like to be contacted, please sign up for address updates again by checking your address at google.com/fiber/kansascity.

The Google Fiber team

According to a story by Karol Bode in DSL Reports, the company’s PR people are insisting that “Google Fiber loves Kansas City and is here to stay” and pointed to other locations in the metro area where construction continues.

I’d love to speculate about what Google Fiber is really up to, but the likeliest explanation is that it doesn’t know itself. It’s pushing microtrenching in Austin and jumping into the fixed wireless Internet service business in the San Francisco Bay Area. Or at least it will if the California Public Utilities Commission approves its purchase of Webpass on Thursday.

Muni broadband endorsed by Comcast, again

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Comcast jumps on board.

Are you wondering whether or not you live in a place where Comcast will soon upgrade at least some of its broadband infrastructure and technology to the high speed, DOCSIS 3.1 standard? All you have to do is check to see whether there’s a municipal broadband project underway nearby. That’s a very reliable way to gauge the esteem that Comcast bestows upon your town.

According to a story by Daniel Frankel in FierceCable, Chattanooga, Tennessee is the next stop on Comcast’s DOCSIS 3.1 road trip, where it will begin offer much cheaper 1 gigabit service to homes and businesses…

Comcast had been delivering its pricey 10-gig fiber service to local Chattanooga businesses, and 2-gig fiber service to local residences. The DOCSIS 3.1 products are much cheaper, starting out at around $140 a month without contract.

Chattanooga’s publicly owned electric utility built a fiber to the premise system and began offering gigabit speeds in 2010, with faster service following in later years. The project, which was initially funded by a $100 million federal stimulus grant, has been credited with amping up Chattanooga’s economic mojo, with neighboring communities begging for the network to be extended.

Comcast’s Chattanooga announcement comes a week after it promised a DOCSIS 3.1 upgrade in Huntsville, Alabama, which also has a municipal electric utility in the process of building an FTTP system, which will be operated by Google Fiber. Huntsville and Chattanooga join a very short and select list of Comcast DOCSIS 3.1 upgrade targets, which includes two other Google Fiber cities, Nashville and Atlanta.

It’ll be interesting to see what Comcast does with its pricing. The Chattanooga muni system offers a gigabit to residential customers for $70 a month, half of Comcast’s standard rate. On the other hand, Comcast can spread costs and generate profits from a wide range of video and other services, over a nationwide footprint. There would seem to be little point for it to go head to head with a muni system if it wasn’t planning to use that market power to the max.

Competition, and something more, drives Comcast upgrade in Huntsville

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Demand.

Chalk up another win for broadband competition. Comcast announced that it was expanding its next generation – DOCSIS 3.1 – cable modem footprint to Huntsville, Alabama, and would be offering gigabit-level service to at least some customers. Details on service locations, roll out schedule and prices were lacking, though.

What clearly isn’t lacking is a competitive threat. Huntsville’s publicly owned electric utility is in the process of building a fiber to the home network that will be operated by Google Fiber and offer gigabit service at about half the price that Comcast charges in the four cities where it’s already offering it. Those cities include Nashville and Atlanta, where Google Fiber is also deploying fiber to at least some neighborhoods, Chicago, where Google-affiliate Webpass is present, and Detroit, which has neither.

Comcast similarly responded to plans in Santa Cruz to build a municipally-backed FTTH system by upgrading its plant.

AT&T previously announced that it would be offering gigabit service in Huntsville. It, too, has reliably followed Google Fiber’s lead as it prioritises the capital investments it makes in service and infrastructure improvements.

Although Comcast and AT&T are certainly playing defence and trying to prevent competitors from gaining a foothold, there’s also something like a virtuous circle effect going on. Google is – or, at least, was – identifying communities that were favorably disposed towards ultra-fast Internet service and then pumping up enthusiasm even further. For example, according to a story by Lee Roop on Al.com, Google reps spoke at a recent meeting of Huntsville entrepreneurs. One talked up the potential for small businesses and “another Google representative said homeowners can expect a $5,000 increase in their homes’ value if they add fiber optic cable”.

The more enthusiasm and awareness, the greater the market potential for high end broadband service. Competition feeds demand which draws even more competition. That’s how Huntsville is staying on the right side of the digital divide.

Initial Charlottesville FTTH share pegged at a realistic 20%

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Ting, a fiber to the home overbuilder, expects its take rate in Charlottesville, Virginia to hit the 20% mark in its first year, and keep growing from there. That’s based on the initial response to its build out, which is very much guided by the level of interest that residents show, according to a Seeking Alpha transcript of Ting’s corporate parent’s latest earnings call (h/t to Sean Buckley at FierceTelecom for the pointer). Tucows CEO Elliot Noss told analysts

It is also worth noting that while we start — started building the network in service and customers in Charlottesville even before we instituted our pre-order system, pre-orders now play a key role in guiding our network expansion there just as we will see in a new town like Holly Springs. Also, pre-order is proving to be about as good as an order with over 90% conversion so far from one to the other…

We expect to see 20% adoption among serviceable addresses in a year and 50% in five years. At these take rates we’ll be paying about $2,500 to $3,000 per customer in CapEx and those customers will be worth about a $1,000 a year in margin.

The 20% figure is a refreshingly realistic assessment of the immediate market potential of an FTTH overbuild in a market where two mainstream telecoms companies – Comcast and CenturyLink – also compete to provide broadband service. It’s in line with the track record of overbuilders in other markets, and particularly with what we know about Google Fiber’s take rates in similarly cherry picked neighborhoods. It’s also an interesting contrast to politically driven projections that aren’t constrained by the legal penalties that await publicly traded companies that pump up false expectations.

On the other hand, 50% is very optimistic, but arguably defensible. As the coverage map above shows, Ting is focusing on areas near the University of Virginia, with higher move in/move out rates , and on newer, affluent residential areas.